Net earnings were 17 percent of sales, 5 percentage points higher than
the first quarter last year.

Proceeds from the private placement of $150 million in notes were used
to repay revolving line of credit borrowings and invested in cash
equivalents.

"Sales momentum picked up in 2010 and continued into the first quarter
of 2011," said Patrick J. McHale, President and Chief Executive Officer.
"Revenue gains were strong across all segments and regions. Returns on
the investments we made during the recession are significant
contributors to current growth. Our good start to 2011 reflects improved
economic conditions and solid execution of our core growth strategies,
including new products and technology, geographic expansion and new
markets."

Consolidated Results

First quarter sales increased 33 percent in the Americas, 27 percent in
Europe and 35 percent in Asia Pacific (31 percent at consistent
translation rates). Translation rates did not have a significant impact
on the overall sales increase of 32 percent.

Gross profit margin, expressed as a percentage of sales, was 57 percent,
up from 54 percent for the first quarter last year. Higher production
volume was the major factor in the improvement. Selling price increases
also contributed to the increase in margin rates.

Total operating expenses increased $11 million (19 percent) compared to
first quarter last year, including increases of $8 million in selling
and marketing and $2 million in general and administrative. Increases in
payroll (headcount and incentives) and product promotion (mostly
Contractor segment) were related to higher levels of business activity.
As a percentage of sales, operating expenses decreased to 31 percent
from 34 percent for the first quarter last year.

The effective income tax rate was 34 percent compared to 34½ percent for
the first quarter last year. There was no federal R&D credit included in
the 2010 rate.

Segment Results

Certain measurements of segment operations are summarized below:

Thirteen Weeks

Industrial

Contractor

Lubrication

Net sales (in millions)

$

122.8

$

70.2

$

24.6

Net sales percentage change

from last year

27

%

38

%

44

%

Operating earnings as a

percentage of net sales

2011

37

%

16

%

21

%

2010

31

%

10

%

10

%

All segments had strong increases in sales and improved operating
margins. Industrial segment sales increased 27 percent, with gains of 26
percent in the Americas, 24 percent in Europe and 31 percent in Asia
Pacific. Contractor segment sales increased 38 percent, including a gain
of 41 percent in the Americas, with substantial increases in both the
paint stores and home centers channels. Sales in this segment were up 33
percent in Europe and 38 percent in Asia Pacific. Lubrication segment
sales increased 44 percent, with strong percentage gains in all regions.

Higher volume and leveraging of expenses drove continued improvement in
operating earnings. Compared to first quarter last year, operating
earnings as a percentage of sales increased by more than 5 percentage
points in all segments.

Outlook

"We're optimistic that sales momentum will continue throughout 2011,
although we expect that percentage gains will decline due to tougher
sales comparisons, particularly in the Contractor segment, where the
initial stocking of new handheld products occurred in the second quarter
of 2010," said Patrick J. McHale, President and Chief Executive Officer.
"We are excited about the previously announced pending acquisition of
the ITW finishing businesses. Financing is committed for the $650
million transaction and we look forward to complementing Graco's already
strong business model with the premium brands, strong distribution
channel and global manufacturing capabilities of those businesses."

Cautionary Statement Regarding Forward-Looking Statements

A forward-looking statement is any statement made in this earnings
release and other reports that the Company files periodically with the
Securities and Exchange Commission, as well as in press releases,
analyst briefings, conference calls and the Company's Annual Report to
shareholders, which reflects the Company's current thinking on market
trends and the Company's future financial performance at the time it is
made. All forecasts and projections are forward-looking statements. The
Company undertakes no obligation to update these statements in light of
new information or future events.

The Company desires to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 by making
cautionary statements concerning any forward-looking statements made by
or on behalf of the Company. The Company cannot give any assurance that
the results forecasted in any forward-looking statement will actually be
achieved. Future results could differ materially from those expressed,
due to the impact of changes in various factors. These risk factors
include, but are not limited to: economic conditions in the United
States and other major world economies, currency fluctuations, political
instability, changes in laws and regulations, and changes in product
demand. In addition, risk factors related to the Company's pending
acquisition of the ITW finishing business include: whether and when the
required regulatory approvals will be obtained, whether and when the
closing conditions will be satisfied and whether and when the
transaction will close, the ability to close on committed financing on
satisfactory terms, the amount of debt that the Company will incur to
complete the transaction, completion of purchase price valuation for
acquired assets, whether and when the Company will be able to realize
the expected financial results and accretive effect of the transaction,
how customers, competitors, suppliers and employees will react to the
transaction, and economic changes in global markets. Please refer to
Item 1A of, and Exhibit 99 to, the Company's Annual Report on Form 10-K
for fiscal year 2010 (and most recent Form 10-Q, if applicable) for a
more comprehensive discussion of these and other risk factors. These
reports are available on the Company's website at www.graco.com
and the Securities and Exchange Commission's website at www.sec.gov.

Conference Call

Graco management will hold a conference call, including slides via
webcast, with analysts and institutional investors on Thursday, April
28, 2011, at 11:00 a.m. ET, to discuss Graco's first quarter results.

A real-time Webcast of the conference call will be broadcast live over
the Internet. Individuals wanting to listen and view slides can access
the call at the Company's website at www.graco.com.
Listeners should go to the website at least 15 minutes prior to the live
conference call to install any necessary audio software.

For those unable to listen to the live event, a replay will be available
soon after the conference call at Graco's website, or by telephone
beginning at approximately 2:00 p.m. ET on April 28, 2011, by dialing
800-406-7325, Conference ID #4432429, if calling within the U.S. or
Canada. The dial-in number for international participants is
303-590-3030, with the same Conference ID #. The replay by telephone
will be available through May 2, 2011.

Graco Inc. supplies technology and expertise for the management of
fluids in both industrial and commercial applications. It designs,
manufactures and markets systems and equipment to move, measure,
control, dispense and spray fluid materials. A recognized leader in its
specialties, Minneapolis-based Graco serves customers around the world
in the manufacturing, processing, construction and maintenance
industries. For additional information about Graco Inc., please visit us
at www.graco.com.

GRACO INC. AND SUBSIDIARIES

Consolidated Statement of Earnings (Unaudited)

Thirteen Weeks Ended

(in thousands, except per share amounts)

April 1,

March 26,

2011

2010

Net Sales

$

217,679

$

164,721

Cost of products sold

93,282

75,426

Gross Profit

124,397

89,295

Product development

9,931

9,474

Selling, marketing and distribution

37,483

29,160

General and administrative

19,914

17,955

Operating Earnings

57,069

32,706

Interest expense

616

1,080

Other expense, net

-

161

Earnings Before Income Taxes

56,453

31,465

Income taxes

19,200

10,900

Net Earnings

$

37,253

$

20,565

Net Earnings per Common Share

Basic

$

0.62

$

0.34

Diluted

$

0.61

$

0.34

Weighted Average Number of Shares

Basic

60,270

60,206

Diluted

61,360

60,713

Segment Information (Unaudited)

Thirteen Weeks Ended

April 1,

March 26,

2011

2010

Net Sales

Industrial

$

122,830

$

96,792

Contractor

70,205

50,797

Lubrication

24,644

17,132

Total

$

217,679

$

164,721

Operating Earnings

Industrial

$

45,025

$

30,474

Contractor

11,115

4,883

Lubrication

5,227

1,707

Unallocated corporate (expense)

(4,298

)

(4,358

)

Total

$

57,069

$

32,706

All figures are subject to audit and adjustment at the end of the fiscal
year.

The consolidated Balance Sheets, Consolidated Statements of Cash Flows
and Management's Discussion and Analysis are available in our Quarterly
Report on Form 10-Q on our website at www.graco.com.